Adaptive lead time quotation in a pull production system with lead time responsive demand

In this paper, a single-stage single-class kanban controlled manufacturing system is considered, where the problem is quoting accurate lead times for orders that are generated by an MRP system. Order release mechanism as in classical MRP is sensitive to the changes in the lead time according to the concept of lead time syndrome. The objective is to establish a cost effective lead time quoting procedure. The problem is modeled as a two-dimensional Markov chain, and it is solved explicitly by using matrix geometric techniques. Comparative analysis is done between static and dynamic lead time quoting procedures, and significant cost benefits of the dynamic procedure are shown under various scenarios. Guidelines for setting design parameters such as the number of kanbans and the frequency of updating the lead time are provided through numerical tests.